Washing Machine War Will Test Trump’s Mettle on Trade

WASHINGTON — A brewing fight over imported washing machines will pose a key test for President Trump’s willingness to impose the type of strict trade barriers he often touts as necessary to protect American businesses.

The United States International Trade Commission cleared the way Thursday for possible trade actions with its ruling that surging imports of washers are harming American manufacturers.

The ruling stemmed from a rare and potentially powerful type of trade case filed in May by Whirlpool Inc. Whirlpool’s petition — just the latest in a series of claims of unfair trade practices against two South Korean manufacturers, Samsung Electronic Co Ltd. and LG Electronics Inc. — says the companies had hopscotched their production facilities around the world to evade duties the United States had imposed on specific countries.

Rather than bring a typical trade complaint — like those Whirlpool successfully brought twice before, claiming that Samsung and LG were “dumping” their products at unlawfully low prices — Whirlpool chose to file a rarely used type of case that could cover all foreign countries and will leave the ultimate decision to President Trump. In this kind of “safeguard” case, the president has broad authority to impose barriers, including a sweeping tariff, if the United States finds that manufacturers were harmed by rising imports.

The president has frequently discussed using tariffs to protect American manufacturers from cost-cutting rivals. But apart from the routine anti-dumping and subsidy cases that crop up in every administration, Mr. Trump himself has yet to enact any broad measure.

“This vote sets the stage for the administration to put in place an effective remedy to create a level playing field for American workers and manufacturers,” Jeff M. Fettig, the chairman of Whirlpool, said in a statement. “This type of corrective action will create U.S. manufacturing jobs.”

Samsung and LG both said restrictions on their products would hurt customers by raising prices, decreasing choices and dampening innovation.

The issue is a complicated one. Critics agree with the South Korean companies’ position that this type of trade case will end up raising costs for American consumers and punish foreign companies who have devised products that are more attractive to American consumers. They also caution that unintended consequences could arise in a world of multinational supply chains, where the dividing line between American and foreign companies is not cut and dry.

And both Samsung and LG have announced plans to hire American workers. LG announced in February that it would build a $250 million washing machine factory that would employ 600 in Clarksville, Tenn. Samsung said in June that it had reached an agreement to open a $380 million factory in South Carolina to produce home appliances. Wilbur Ross, the secretary of commerce, had attended the signing of Samsung’s agreement and called the investment “great news.”

Whirlpool’s safeguard case is the latest salvo in a series of escalating trade actions the American company has brought against its rivals. In 2013, the United States made a final ruling that dumped and subsidized imports from South Korea and Mexico were hurting American competitors and imposed duties on those countries. In early 2017, the United States finalized similar duties on washers from China, where Whirlpool says the South Korean companies had relocated their manufacturing facilities.

Now, Whirlpool says the companies have moved production to Vietnam and Thailand to evade further duties. In a trade case filed May 31, Whirlpool said that its rivals were still selling imported washing machines at illegally low prices, and appealed to the United States government for more sweeping protections.

At a conference in March, Peter Navarro, a White House adviser on trade, cited the practices of Whirlpool’s competitors as evidence that America needed a different trade strategy.

“This heartland of America icon,” Mr. Navarro said, referring to Whirlpool, “is grappling with a practice called country hopping, in which two of its South Korean competitors, LG and Samsung, simply move their production to another country each time Whirlpool wins an anti-dumping case against them.”

At a hearing on Oct. 19, American trade officials will begin considering what measures, if any, could help offset Whirlpool’s losses. They will send their recommendations to the president by Dec. 4.

The case could ultimately be challenged at the World Trade Organization. In 2003, the W.T.O. ruled against steel tariffs that President George W. Bush had imposed following a similar trade case, and the United States chose to withdraw those measures rather than face retaliation from its European trading partners. But given the current backlog of trade disputes at the W.T.O., such a ruling could take years.

Once rarely used, the safeguard provision is being tapped by companies more frequently since Mr. Trump’s election. Earlier this year, two solar companies brought a similar safeguard case against their foreign rivals. Before that, the safeguard provision had not been used in the United States since the steel industry case. In the intervening years, Barack Obama’s administration chose to rely on the W.T.O. to settle disputes, and companies judged that the president was unlikely to back their requests for broad tariffs.

Stephen J. Orava, head of the international trade practice at the law firm King & Spalding, said the Trump administration’s more protectionist stance is emboldening American companies to bring more trade cases. The administration has “dusted off all the tools” to help firms build up their manufacturing, and “companies should be looking at ways to take advantage of that situation,” Mr. Orava said.

Jack Levy, the lead counsel for Whirlpool in the safeguard case, said he believed the Trump administration’s tougher attitude on trade rules was encouraging companies to consider bringing more dumping cases. But he said that Whirlpool “would have had no choice but to bring this case under any administration.”

Over the past several decades, Whirlpool swallowed up market share and became the dominant American manufacturer of washing machines by acquiring smaller rivals, including Maytag Corporation in 2006.

But in the last decade, it has faced tough competition, mainly from Korean conglomerates. Whirlpool went from having a 22.6 percent share in total dollar value of the American market for washing machines in mid-2008 to 17.4 percent in mid-2017, according to data by TraQline, a retail and consumer market share survey run by the Stevenson Company. In the same time period, Samsung’s market share soared from 1.7 percent to 19.8 percent, while LG’s grew from 12.6 percent to 16.2 percent.

Supporters of Whirlpool’s trade case say that South Korea, China and other countries unfairly subsidize and protect their markets, leaving American producers, which must pay wages American workers find acceptable, at a disadvantage.

A version of this article appears in print on , on Page B4 of the New York edition with the headline: Whirlpool’s Washing Machine War Will Test Trump’s Tough Talk on International Trade. Order Reprints | Today’s Paper | Subscribe